Medical Cannabis Zoning Battle Could Cost Detroit Millions

Detroit’s city council was poised to implement medical cannabis zoning regulations, but then voters stepped in and overturned those regulations — and then a circuit judge overturned the voters. The resulting legal quagmire could cost Motor City millions.

The tumultuous recent history of cannabis decriminalization in Michigan began in 2008 with the voter approval of the Michigan Compassionate Care Initiative, which decriminalized medical cannabis for patients with qualifying conditions.

In the absence of a regulatory framework, a self-regulated medical cannabis market expanded rapidly, inspiring a legal backlash that culminated in a 2013 Michigan Supreme Court ruling that medical marijuana dispensaries were not protected by the state’s medical cannabis law and could be shut down as a “public nuisance.”

But by 2016, the state legislature had approved a new medical cannabis law that created a tax and licensing framework, inspiring local municipalities to create their own regulatory structures for medical cannabis, which is right about the time when Detroit emerged as a legal and political battlefield.

Motor City was once home to more than 250 dispensaries, but that number is down to 62 since the start of 2018, the result of a major crackdown in 2017 that saw most clubs in the city shuttered. This stepped-up enforcement was part of the city’s plan to implement new medical marijuana regulations, but when voters rebelled against the plan, things got messy.

Detroit was in the process of drafting an ordinance last year that would have limited the number of marijuana businesses and enacted strict guidelines on where those businesses could be located and how they would get approval from the city. As a part of that effort, the city shuttered many of its dispensaries, leaving only about 70 to continue operating under emergency rules crafted by the state. That effort was upended when voters, by a 60-40% margin, passed two ordinances in November that were geared toward opening up the market to more people and a much wider swath of the city.

Further complicating matters, after the voters overturned the city, a circuit judge overturned the voters, ruling that they could not override a city zoning ordinance through initiatives.

Many in the cannabis decriminalization movement are concerned about what they perceive as a subversion of democracy; if the will of the voters doesn’t matter, they ask, why vote at all?

But representatives of the city, like City Councilman James Tate — who authored the legislation initially overturned by the voter initiatives — told the Detroit Free Press that this current legal quagmire is symptomatic of a need for increased cooperation and communication between the voters and the city.

“This is a cautionary tale for those who want to seek ballot initiatives with illegal language in them or language that is afoul of proven case law,” Tate told the paper. “This is what has created this situation. … (Not) working with the city to try and find some common ground. This is a perfect example of things that can go wrong.”

Emergency regulations allow the remaining clubs to continue operations while waiting for state licenses, but that grace period will end June 15, and many cannabis industry participants and supporters aren’t confident the city will have an ordinance in place by then.

Attorney Michael Stein, who represents medical marijuana dispensary owners, told theDetroit Free Press that the city is more focused on the legal battle over the voter initiatives than it is over getting a new ordinance in place by June 15.

“We’re planning on the appeal of the judge’s decision and then there are going to be some lawsuits for damages as a result of that litigation,” Stein said. “What the City of Detroit is going to do is drag its feet, making it impossible for anybody to get the approval they need before the June 15 deadline (set by the state).”

This concern is causing many cannabis businesses to move to the suburbs, which could ultimately mean major losses for the city when it misses out on what’s projected to be a $711 million to $1 billion state industry, particularly with the potential for adult-use legalization this November.

Paula Givens, an attorney and cannabis business consultant, said she’s going to keep telling her clients what she’s been telling them. Givens told the Detroit Free Press, “Ever since the medical marijuana law was passed, I’ve told prospective business owners to stay away from Detroit.”

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